Flush the Toilet: Young Entrepreneurs

Ouch Dave. I think you may have struck more than just a few Entrepreneurial nerves with this post.

underprivileged minorities and people with low income…?

Last time I checked, I don’t recall a commercial with a homeless person walking in to McDonalds(even though it happens). I don’t recall a commercial with a single mom and 4 kids scrounging for change to grab something at McDonalds for the entire bunch, but I do recall kids… lots of kids! I believe kids(and recently the health kick people) are they’re focus with commercials and when you get kids wanting McDonalds, the parents eat there too. Voila! You have your following.

But to say McDonalds targets underprivileged minorities and people with low income… I think that’s a far stretch.

Every fast food joint is usually pretty cheap. It’s the convenience and low price that’s attractive. Even to the local rich dude with a Mercedes.

In regards to the Dollar Menus… what an idea! They hit the jackpot when the $1 menus started sprouting up everywhere.

What’s my Dollar Menu? Funny you ask. I recently launched a site called:

http://www.mymilitaryclassifieds.com

Although this site may not particularly be useful for your readers, it’s a perfect fit for the military consumer and at the low price of FREE, I think that falls in your:

“services that are very affordable and can be marketed on a mass scale”

category. Dont’ya think?

I STRONGLY agree with you, David. McDonald’s definitely targets the underpriveleged, minority family intentionally. It’s all a business. They understand that their target audience is going for the cheap, quick, convenient, and very unhealthy alternative; while trying to portray themselves as a family-oriented corporation.

It’s not a negative thing when David says they are targeting minority groups. McDonald’s knows exactly what they’re doing and their marketing team is extremely intelligent. For instance, their whole new marketing strategy “I am Asian” is DEFINETLY going after a targeted minority. Also, McDonald’s isn’t scared to say that one of their values is their diversity. But as an Asian-American, I find it extremely offensive that they even made that site. It is directly on their website and displays all sorts of stereotypical Asian items strategically around the room. I think people should do their research and have backing behind their comments.

And the comment about McDonald’s and health conscious consumers? Are you kidding. You are pefectly playing into McDonald’s marketing strategies. I just think it’s funny how someone is so offended, yet wants to plug his own website. Good marketing.

David, continue provoking provacative issues. It’s the ones who stay on the safe side, that remain a sheep in the herd.

I thought I was the only one who noticed that about the commercials

It is a brilliant strategy - when starting a business it’s easy to focus on your margin, but a company like McDonalds or a grocery store has extremely small margins but does an insane amount of volume to make a ton of money. Seriously, how much money do they really make off of that $1 burger? When you factor in labor costs, facility costs, shipping costs, the cost of the food, and about five other things they probably make a few cents. But they are extremely consistent in their operations and have perfected their supply chain, so they can always make that 5 cents every time a burger is sold and just do it billions of times a year without much variation in the process. Brilliant!

Dave et al,

I think the mark has been slightly missed on this topic. It is true that they make peanuts on their dollar menu burgers and such, and in fact it is a strong possibility that they even lose money. Let’s just say they make 5 cents as Adam suggested. Even then, at $0.05 profit per burger, they would need to serve 1 BILLION of them a year just to make a $50 million profit. Not a lot of profit.

Definitely not a lot profit when one considers the fact that McDonalds is a franchise with individual owners who simply report to corporate. That means that McDonalds $50 million is easily cut in half, and that also means that the store owner is flipping a minimal amount of dollar burgers for close to no profit every year.

So why do they have the dollar menu then? It’s really not because of the small margin on high volume concept at all. It’s actually to entice you to McDonalds in the first place. Their hope is that if they can get you to buy a $1 burger, you’ll also buy a soda, and then COMBINED, they just made an entire $1 of profit. Because while a burger may cost right around a buck to ultimately produce, a soda is simply water + cheap syrup + a 5 cent cup (which is the most expensive part of the entire end product).

It’s kind of like when you go to a retail store to buy a computer and then they try to get you to purchase an extended warranty. Well guess what, any manager of a story such as, say, Best Buy, would tell you that they actually LOSE about $50 on your run-of-the-mill $500 computer. But if they can get half the people that buy them to purchase a $250 extended warranty which costs Best Buy close to nothing to support, then on average, they make ~ $200 on every computer. Ever wonder why they try so hard to sell you the warranty while they could seemingly care less about the computer itself?

Now, ask yourself, why it is that McDonalds spends so much time and money marketing a $1 burger, and then once you’re in the store, spends more time/effort trying to get you to buy a large soda and/or fries.

I think Taco Bell is a more fitting example of value for your buck. Wasn’t Wendy’s the first one with the official dollar menu? well, i guess it’s technically 99 cents, but who’s counting?

Thanks for your comments guys. I think I know more about McDonalds’ business structure more now than ever before! Anthony, you make a fine point about the true reasoning for their dollar menu, which helps inspire me to try and offer the same type of “buy-this-for-cheap-but-also-spend-money-on-this” marketing strategy which is simply brilliant.

Karina, thanks for that insight into the way Mc’dys targets minorities — that is very true and it’s definitely a part of their business plans as I noted about their commercials.

Dale, yup, Toco Bell is on the same track of business.

Double ouch Katrina.

First, I’m not offended. I’ve got the ol’ thick skin.

Second, I never said I was offended. I see David’s point of view as each one who has commented brings up valid arguments as to the intent of the “Dollar(or .99..lol) menu marketing scheme, but I have to agree with Anthony… upsell, upsell and upsell i why they do it.

As for the Asian commercials… I haven’t seen them recently. I’m currently in Okinawa, Japan for a few more months, so American commercials are rare. Everyone’s pushing to hit those niche markets. P-Diddy has a company that markets to the “hip-hop” consumer and he’s making a lot os $$$.

On to the health conscious response… I never said I “believe the hype”. It’s all a bunch of crap.. Taco Bell, McDonalds, Wendy’s, etc. While I like my occasional fatty burger or tacos, but c’mon… fast food is fast food and it’s not exactly “healthy”. I simply commented on their attempt to entice those consumers.

Plugging my site…lol. Dave asked, “What’s your dollar menu?” So I answered the question… so sue me.

I like you already Katrina! Take care.